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EEOC, FTC Issue Best-Practice Guidance on Background Checks

Members may download one copy of our sample forms and templates for your personal use within your organization. Please note that all such forms and policies should be reviewed by your legal counsel for compliance with applicable law, and should be modified to suit your organization’s culture, industry, and practices. Neither members nor non-members may reproduce such samples in any other way (e.g., to republish in a book or use for a commercial purpose) without SHRM’s permission. To request permission for specific items, click on the “reuse permissions” button on the page where you find the item.

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The U.S. Equal Employment Opportunity Commission (EEOC) and the U.S. Federal Trade Commission (FTC) recently co-published two guidance documents reiterating how the agencies’ respective laws apply to background checks performed for employment purposes. The documents do not introduce any new agency guidance but provide “best-practices” guidelines and additional resources. One
document is for employers; the other
is for job applicants and employees.

“The laws enforced by the EEOC and the FTC intersect on the issue of employment background checks, so this was a unique opportunity for the agencies to work together to provide user-friendly technical assistance to our stakeholders,” said EEOC Legal Counsel Peggy Mastroianni, in a news release.

The guide for employers does provide a good review of an employer’s obligations under the Fair Credit Reporting Act (FCRA), and a snapshot of additional obligations under the Americans with Disabilities Act, the Genetic Information Nondiscrimination Act and Title VII’s recordkeeping requirements, remarked Pamela Q. Devata, a partner in the labor and employment practice group of Seyfarth Shaw. “However, it is important for employers to recognize that each of these areas of the law is nuanced and not conducive to a mere bullet-point analysis. Employers conducting background checks should be sure to evaluate their policies and processes in light of these publications and also train their human resources professionals on these laws.”

Employers also need to remember that many state and local requirements may be applicable to running background checks and taking adverse actions based on the results.

What Employers Should Know

Even though the information in the documents is not new, it could be a valuable refresher for employers. First, companies should understand that the EEOC oversees employment-based background checks to prohibit unlawful discrimination, and the FTC monitors employers’ use of background checks performed by consumer reporting agencies to enforce the FCRA’s notice and fair play provisions.

Key requirements for complying with federal nondiscrimination laws and the FCRA include:

Before You Get Background Information

*Treat everyone equally. It’s illegal to check the background of applicants and employees when that decision is based on a person’s race, national origin, color, sex, religion, disability, genetic information (including family medical history) or age (40 or older). For example, asking only people of a certain race about their financial histories or criminal records is evidence of discrimination, the EEOC document states.

*Except in rare circumstances, do not try to get an applicant’s or employee’s genetic information, which includes family medical history. If you have that information, don’t use it to make an employment decision. Don’t ask medical questions before a conditional job offer has been made. If the person has already started the job, don’t ask medical questions unless you have objective evidence that he or she is unable to do the job or poses a safety risk because of a medical condition.

*Provide notice to the applicant or employee that you might use background information from a consumer reporting agency for decisions about his or her employment. This notice must be in writing and in a stand-alone format. The notice cannot be in an employment application.

*Tell the applicant or employee of his or her right to a description of the nature and scope of investigative reports conducted by third-party providers.

*Get the applicant’s or employee’s written permission to perform a background check. This can be part of the document you use to notify the person that you will get the report. If you want the authorization to allow you to get background reports throughout the person’s employment, make sure you say so clearly and conspicuously, the FTC said.

*Certify to the company from which you are getting the report that you notified the applicant and got his or her permission to get a background report; complied with all of the FCRA requirements; and won’t discriminate against the applicant or employee, or otherwise misuse the information in violation of federal or state equal opportunity laws or regulations.

Using Background Information

*Apply the same standards to everyone, regardless of their race, national origin, color, sex, religion, disability, genetic information or age. “For example, if you don’t reject applicants of one ethnicity with certain financial histories or criminal records, you can’t reject applicants of other ethnicities because they have the same or similar financial histories or criminal records,” the EEOC said.

*Take special care when making an employment decision that “significantly disadvantages individuals of a particular race, national origin, or another protected characteristic, and does not accurately predict who will be a responsible, reliable, or safe employee.” The EEOC considers these practices to have a “disparate impact.”

*Before you take an adverse employment action (not hiring an applicant or firing an employee), you must give the applicant or employee a notice that includes a copy of the consumer report you relied on to make your decision and a copy of
A Summary of Your Rights Under the Fair Credit Reporting Act, which you should have received from the company that sold you the report. By giving the person the notice in advance, he or she has an opportunity to review the report and explain any negative information.

*After you take an adverse employment action, you must tell the applicant or employee (orally, in writing or electronically) that he or she was rejected because of information in the report; the name, address and phone number of the company that sold the report; that the company selling the report didn’t make the hiring decision and can’t give specific reasons for it; and that he or she has a right to dispute the accuracy or completeness of the report, and to get an additional free report from the reporting company within 60 days.

Disposing of Background Information

*Any personnel or employment records you make or keep (including all application forms, regardless of whether the applicant was hired, and other records related to hiring) must be preserved for one year after the records were made or after a personnel action was taken, whichever comes later. The Department of Labor extends this requirement to two years for federal contractors that have at least 150 employees and a government contract of at least $150,000. If the applicant or employee files a charge of discrimination, you must maintain the records until the case is concluded.

*You may securely dispose of any background reports you’ve received after satisfying all applicable recordkeeping requirements. That can include burning, pulverizing or shredding paper documents and disposing of electronic information so that it can’t be read or reconstructed.

Members may download one copy of our sample forms and templates for your personal use within your organization. Please note that all such forms and policies should be reviewed by your legal counsel for compliance with applicable law, and should be modified to suit your organization’s culture, industry, and practices. Neither members nor non-members may reproduce such samples in any other way (e.g., to republish in a book or use for a commercial purpose) without SHRM’s permission. To request permission for specific items, click on the “reuse permissions” button on the page where you find the item.